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5) The MPC can be defined as: a) The absolute change in consumption for a $1 change in disposable income b) The increase in consumption for a $1 change in disposable income c) The absolute change in consumption for a 1% change in disposable income d) The amount of consumption that takes place regardless of income 6) The following event will have a positive impact on the AS curve: a) A hurricane destroys 30% of the economys capital stock. b) Labor productivity rises as a result of important investment in human capital. c) The cost of imported inputs increases significantly d) Both b and c. 7) I) A common assumption in Economics is that a countrys exports are not significantly affected by that countrys GDP. II) An increase in corporate taxes lowers investment. a) I and II are true. b) I and II are false. c) I is true, II is false. d) I is false, II is true. 8) I) An economy can always self-adjust instantaneously out of a recessionary gap. II) Contractionary policies help an economy get rid of inflationary pressures. a) I and II are true. b) I and II are false. c) I is true, II is false. d) I is false, II is true. 9) Stagflation occurs when: a) AD is falling. b) AS is falling. c) Both AD and AS are falling. d) AD is rising. 10) The intercept of the consumption function reflects: a) Borrowing b) Lending c) The amount of consumption in an economy where national income is below the standards for developed countries d) The amount of consumption in an economy that is operating at an inflationary gap